Posted: October 16, 2011 |  AUTHOR: KEN FOX | CONTACT ME

 

While Portugal is facing serious financial issues in the EU, its former colony of Angola is having sort of a renaissances. The Portuguese colony of Angola was founded in 1575 with the arrival of 100 colonist families and 400 soldiers. It won its independence from Portugal in November 1975. There have been civil wars and rebel uprisings that ravaged the country since then. However, given its oil reserves, the country has been seemingly discovered and revitalized with the help of the Chinese government.

The first China-Angola Trade Agreement was signed in 1984. Civil wars delayed the growth of the relationship. However, since 2004 China has been major buyer of Angolan oil but acts as an investor and bank to this country. China has provided credit to the country for infrastructure (roads and bridges) improvements and has invested in a number of buildings and other projects. The first financing package equated to $2 billion, and was agreed to in March 2004. Hospitals, schools, roads, railways and basic infrastructures for each province in Angola were part of the first loan beneficiaries. In 2006, the loan was doubled to $4 billion, turning China into a bigger player in Angola.

Angola became a member of OPEC in 2007. Angolan oil production is forecast to reach two million barrels a day by the end of 2011. In March 2010, Sinopec, China’s national refinery, the biggest in capacity in Asia, purchased a 55% stake in Sonangol, Angola’s largest oil company. Other China companies are involved in Angola. China Roads and Bridges Corporation has been hired for major road and bridge construction. Their contract is valued at $211 million. China is also involved in Angola railroad construction. China provides credit but also the know how of engineers and specialized technicians who participate in these reconstruction efforts. Currently, there are 40,000 Chinese living in Angola according to the Angolan Embassy in Beijing. China has waived almost $10 million U.S. dollars worth of debts that Angola owes the country. The U.S. imports the largest amount of oil from Angola, followed by China. The oil exports from Angola to China have increased sevenfold since 2002.

Along with Angola’s increasing prosperity, there has been an inflow of professionals who are leaving Portugal’s sickly economy. Portugal’s foreign ministry says it has registered 45,000 Portuguese citizens as residents of Angola between 2007-2008. A year later this figure jumped to 92,000. Not too long ago, Angolans were fleeing civil war, looking for a better life in Portugal. The IMF estimates Angola’s GDP will grow 7.8% this year and 10.5% in 2012. Portugal based building and financial companies such as Teixerira Durte, Soares de Costa and Mota Engil are switching growth efforts to Angola versus their home market. Portuguese banks dominate the Luanda’s (the capital’s) financial sector.

Another reason for writing this blog is the “language” connection between Angola and Portugal, where Portuguese in the primary language. From a marketing perspective, there may be synergies for a company to implement or utilize Portuguese language marketing materials, sales promotions and social media efforts in all these two countries (plus Brazil). Additionally, like South Africa, Botswana and Nigeria, Angola is another example of Africa’s rising. China, seeking natural resources and oil from Africa, has made a commitment as partners not buyers. This building of trust between China and select African countries may go a long way to help provide stability to the African continent. It will also help to ensure the supplies of oil, agricultural products and other natural resources keep flowing to China.

*Source: Transparency International, 2010 Corruption Perceptions Index, scores range from zero to 10, with zero indicates a high level and 10 a low level of corruption (e.g., the lower the number the higher the perceived corruption)

Other sources for above chart and blog: IMF, WIKIPEDIA, Bloomberg/Business Week, China Customs, The Economist and Macao Magazines

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©2017, The Global Galaxy blog is produced by The Soundings Group, LLC, Charleston, South Carolina, USA, www.thesoundingsgroup.com. The company is an international business consulting firm, specializing in new market assessments, market entry strategies and marketing guidance. The scope of Global Galaxy is to cover timely international trends, issues and business building ideas. Its purpose is to educate, inform and stimulate thinking for business opportunity analyses.

 

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